CurAegis Technologies Inc., formerly Torvec Inc., said Friday that it would discontinue operations as a result of lack of financing.
In a filing with the Securities and Exchange Commission, the Mt. Read Boulevard company said it did not have access to sufficient capital or prospects of additional financing to continue operations and meet its contractual obligations, “and is planning a complete and immediate cessation of operations.”
CurAegis previously said in its annual reports from 2016 through 2020 that there was substantial doubt as to the company’s ability to continue as a going concern. As of Sept. 30, 2020, the company reported cash on hand of $87,000, total assets of $284,000, negative working capital of $4.1 million, an accumulated deficit of $93.5 million and a stockholders’ deficiency of $14.8 million.
In addition, the filing stated that CurAegis would not be able to file its annual report for the year ended Dec. 31, 2020, nor its current and periodic reports going forward due to lack of financial and management resources.
The company was incorporated in New York in September 1996 under the name Torvec. Since its inception, the company has sought to design, develop, build and commercialize its technology portfolio, but it has not produced any significant revenue-producing operations. The company’s name was changed to CurAegis Technologies in 2016 in connection with the establishment of two business divisions.
The company’s Aegis division was engaged in the legacy power and hydraulic business. The company completed the sale of its Aegis division assets, including its hydraulic testing equipment, prototypes and other fixed assets, as well as intellectual property, including patents, trademarks and trade secrets relating to the Aegis division business in December 2020.
Agreements entered into in connection with the sale of the Aegis assets entitled the company to earn royalties subject to the successful commercialization of the Aegis assets by the buyer. The filing notes that CurAegis does not expect that any royalties will be forthcoming in the near term or that royalties will be sufficient to fund its operations or discharge its debts.
Five business days after the sale of the Aegis assets, $1.7 million in unpaid principal together with then unpaid and accrued interest and other amounts payable under the 6 percent senior convertible promissory notes issued during 2019 and 2020 became due and payable under the terms of the notes. CurAegis has not repaid the 2019 notes and does not have funds sufficient to do so, officials said in the filing. Continuing non-payment of the outstanding balances is an event of default under the terms of the 2019 notes, and will likely trigger cross-defaults under other of the company’s contractual obligations, the filing stated.
The company’s CURA (Circadian User Risk Assessment) division has been engaged in the fatigue management business and in the provision of solutions for health and fitness application developers. Last month, the CURA division’s lead developer resigned from his position with the company. Due to lack of financial resources, the company does not intend to fill the position. The CURA division is now inactive and would require significant capital and financing to commercialize its product offerings and maintain operations, the filing states.
The company’s quarterly report for the quarter ended Sept. 30, 2020, showed that CurAegis has received a request for arbitration on a total claim of $1.948 million from Ansen Corp. with respect to alleged past due payments and interest. The case (No. 01-20-0015-4394) has been referred to an arbitrator as of March 1, 2021. On Feb. 3, 2021, Emerging I Inc. dba Emerge, filed a complaint in the New York Supreme Court for the County of Monroe, seeking total damages of $108,500, plus interest, from the company for failure to pay invoices.
CurAegis has not responded to the two claims and does not anticipate it will be able to devote resources to defending these or any future claims, according to the filing.
In 2011, while serial entrepreneur Richard Kaplan was at Torvec’s helm, the company raised $6.5 million in a private placement of preferred stock, including a roughly $6.23 million investment by a group of investors led by Thomas Golisano. At one time, former Bausch & Lomb Inc. chairman and CEO Ronald Zarrella; Philip Saunders, owner of Saunders Management Co. and founder of TravelCenters of America Inc.; and Bonadio Group Managing Partner and CEO Thomas Bonadio were key members of the company’s board.
Former Rochester Institute of Technology president William Destler also had served on Torvec’s board at a time when brothers and co-founders James and Keith Gleasman were heading the company. At that time, Torvec had some 300 automotive patents and inventions, including the IsoTorque differential, the Infinitely Variable Transmission and the Full Terrain Vehicle.
Current company CEO James Donnelly did not immediately respond to a request for comment Friday afternoon.